GDP PPS (2010): EUR 36 034
GDP/ capita PPS (2010): EUR 10 700
GDP growth (2011): 2.2%
Unemployment rate (2011): 10.2%
Budget deficit % GDP (2010): -3.1%
Government debt % GDP (2010): 16.3%
Stock of direct foreign investment: USD 51.45bn
Overview of Bulgaria‘s economy and foreign trade
Between 2004 and 2008 the Bulgarian economy registered an average annual GPD growth rate of more than 6%, fuelled largely by domestic consumption and foreign direct investments. Although the 2008-2012 financial crisis affected seriously the country‘s economy (GDP dropped by approximately 5% in 2009), Bulgaria has since 2009 registered a significant increase in its exports (exports in the first eleven months of 2011 grew by 31% over the first eleven months of 2010). 62% of Bulgarian exports go to other EU member states, making the EU Bulgaria‘s largest trading partner by far. Imports for the first eleven months of 2011 also grew by 21% over the preceding year, which coupled with exports‘ growth resulted in an overall 2011 GDP growth of a little over 2.3%. For the next five years economists forecast further economic growth, despite at much more moderate rates (around 3% per year) as Bulgaria‘s main trading partners (all EU countries) are struggling to resolve the ongoing sovereign debt crisis.
Bulgaria‘s low sovereign debt level (currently at 16% of GDP), low budget deficit (below 3% of GDP in 2011 and forecast at 2.3% in 2012), solid foreign exchange reserves and stable conservatively regulated banking system have turned the country into a stable open economy. Furthermore, Bulgaria boasts the EU‘s lowest flat corporate and personal income tax rates (both at 10%) and has begun to invest significant amounts of EU funds to update its infrastructure, which coupled with the country‘s competitive labour costs, are strong magnets for foreign direct investments. Thereby, going forward, economists expect stable economic growth, resulting in further growth in interational trade, despite economic problems in Western Europe. An additional factor for economic growth is the fact that the country has shown signs that it is trying to diversify its foreign trade, by turning to its historically traditional partners of the Middle East, markets in which Builgaria enjoyed strong positions before the country‘s transition to market economy. Bulgaria‘s geostrategic position as bridge between Europe and Asia, is further strengthening the predictions for a rise in trade with the Middle East, as Bulgaria is expected to serve increasingly more as a door for Middle East goods to the European market.
As potential risks to the Bulgarian economy, analysts point to the relatively high levels of corruption, especially among the high levels of the public administration, and the inefficient judiciary system, which are impeding further foreign direct investment. Also, the country‘s strong economic interconnection with the struggling Western European markets is an additional threat to economic growth. Finally, Bulgaria‘s heavy reliance on Russia for energy resources creates a risk to the country‘s energy supplies, which was evidenced by the 2008 interruption of natural gas supplies to Bulgaria due to a Russia-Ukraine gas transit dispute.
The growth in foreign trade and transit has resulted in a steady growth of the Bulgarian logistics sector. As of 2010, there were a little over 19 000 logistics and postal companies registered in Bulgaria that gave employment to 155 745 Bulgarians, and produced a total value add of BGN 2.920bn to the Bulgarian economy (including Bulgarian Posts, airlines and shipping companies).
The Bulgarian clothing & textiles industry as a driver of growth for the transport market:
The Bulgarian clothing & textiles industry is the country‘s second most important economic contributor after tourism, consisting of 3000 small and medium companies and employing approximately 170 000 people. 88% of the country‘s clothing production is exported to the EU, with about 33% of the materials needed for the production of those clothes coming from the EU. Thereby, the clothing and textiles industry is a major source of income for the Bulgarian transport and forwarding companies.
The clothing & textiles industry is poised for even further growth due to the following factors which make Bulgaria an attractive production location for Western European apparel companies:
- location close to core European markets which allows for fast, flexible and competitively-priced transportation that fits just-in-time (different from other remotely located countries, such as China)
- high quality, allowing for production of boutique and high-end brands
- competitive production costs – lowest corporate and income taxes in the EU, competitive labour costs compared to the rest of the region
- highly skilled labour force
- modernized technology base
- modern management systems of production quality
- no import taxes for Bulgarian produce on the EU market
With its fast, flexible and reliable service, Omega Trans has specialized in responding to the ever-changing and expanding logistics needs of the Bulgarian clothing & textiles industry.
Sources: NSBS, Bulgarian National Statistics Institute, Eurostat, bgfashion.net, CIA World Factbook